Salary Converter

1. Using the salary converter
2. Salary conversion examples
• Hourly rate to monthly salary conversion
• Annual salary to hourly rate equivalent
• Daily rate to salary conversion
3. Job market and business considerations

    Using the salary converter

This versatile salary converter can be used to convert an hourly rate or a day rate to a weekly, bi-weekly, monthly, quarterly, or yearly salary (annual salary). Similarly, it can be used to convert a salary to an hourly rate. When converting dayly pay to weekly or bi-weekly salary, it assumes the work days per week entered are averaged over a year, but when it is used to convert daily pay to monthly, quarterly or yearly salary it will instead ask for a precise number of regular work days and then separately for the number of holidays and vacation days to subtract from the total number of work days. This ensure quite accurate conversion. For hourly rate conversions it always assummes that the number of hours worked per week are averaged over the year.

With help from the salary converter you can make a more informed decision when considering what hourly rate to offer as a contractor or freelancer. You can also compare your regular salary payments to an equivalent daily wage or hourly rate to see how your pay measures against that of others. If you end up comparing your salary as an employee to hourly rates of consultants and other outside contractors, make sure to account for the expenses they incur which your employer usually covers for you, such as office space, electronics, software subscriptions, accounting expenses, professional education, certification, and so on.

    Salary conversion examples

There are many possible conversions supported in our salary converter above. Some selected examples follow.

Hourly rate to monthly salary conversion

Example task 1: Your hourly rate is $35. What monthly salary offer should you be willing to accept if you want to increase your income by at least 20% to justify the transition from a contractor to an employee?

Solution: start the hourly to monthly conversion by summing up the number of hours you worked over the past year and dividing them by 52 (or 52.14 for a more precise calculation), resulting in the average hours you work per week. Let us say you establish that you've been working an average of 60 hours per week in the past year. Then you can easily calculate that you've made 60 · $35 · 52.14 = $109,494 in a year or $9,124.5 per month. 120% of that is $10,949.4 so this is the minimum monthly salary you should be bothered to discuss.

Annual salary to hourly rate equivalent

Example task 2: Your current salary is $90,000 per year. You are considering moving into a contractor role and want to at least maintain your current income level. What is the minimum hourly rate you should set, without taking into account the additional expenses? (taking that into account will likely require a higher rate to maintain the same standard of living)

Solution: start the yearly to hourly conversion by deciding how many billable hours you believe you can reasonably work over the next year. Let us say you believe you can bill 30 hours peer week or 30 · 52.14 = 1564.2 hours per year. To maintain the same yearly income of $90,000, you need to charge $90,000 / 1564.2 = $57.54 per hour.

Daily rate to salary conversion

Example task 3 convert a day rate to salary equivalent, both annual and monthly. Say you earn a daily rate of 200 USD per day, and you want to find out what monthly or annual salary this equates to.

Solution: the most important calculation is the number of days you work or expect to work per year at the specified daily rate. If you work five days a week, fifty weeks per year, then that adds up to 5 · 50 = 250 working days per year. The annual salary needed to make the same income is then 250 · 200 = 50,000 USD. To convert to a required monthly salary, just divide the annual salary by 12: 50,000 / 12 = 4,167 USD per month.

    Job market and business considerations

Obviously, these are merely calculation examples and do not consitute financial or career advice. Switching roles is much more than doing some math due to the numerous assumptions which relate to the practical applicability of those numbers. For example, while you may believe you can find clients to bill for 30 hours per week at a rate of $57, it might be more feasible to work 60 hours per week at a rate of $27 per hour due to the dynamics of labor supply and demand. On the other hand, it might turn out that you can only find 10 hours of work per week, so you may need to negotiate for much higher pay.